A LIVERPOOL housing association could be forced to repay up to £7m in overpaid rents to thousands of tenants if it loses a court battle.

A LIVERPOOL housing association could be forced to repay up to #7m in overpaid rents to thousands of tenants if it loses a court battle.

Two Riverside Housing tenants from St Helens claim a technicality in their rent review does not allow annual rises, dating from 2001.

Last July Judge Stewart QC, in Liverpool county court, ruled in favour of the housing association, saying it had lawfully increased the rent over the past four years.

He also refused the two tenants permission to appeal against his decision.

But last month Lord Justice Waller, in London's court of appeal, granted the two permission to appeal against Judge Stewart's judgement on the basis that the validity of the rent increases "seems arguable".

The case is now expected to be heard by the court of appeal by the end of January. If it finds the rent increases from 2001 are unlawful, it could affect 5,000 Riverside Housing tenants and cost the organisation up to #7m in overpaid rent.

If the tenants' claims are upheld, the outcome could have serious implications for other social landlords all over the country.

St Helens lawyers Stephensons have acted for the tenants. Their solicitor Tony Fearnley said: "When tenants risk the loss of their home for alleged rent arrears it is vitally important that the court is certain about the amount of monies involved.

"In this case doubts had arisen about whether the landlord had increased the rent as permitted by the tenancy agreement since 2001."

However, Riverside Housing said the defence of the tenants, who are in "significant rent arrears," is invalid.

A spokeswoman said: "The association is confident that the appeal court will uphold Judge Stewart's position.

"No Riverside tenant has been charged more, or paid more rent than was agreed within his or her individual tenancy agreement. In the period 2000-2004, which is the period disputed by the tenants, rents were increased by a lower amount and at a later time than the agreements allowed for."

She said rent is a key part of Riverside's income and that "costly legal action is a regrettable use of the association's resources."